How to Choose the Right Cross-Border Financial Planner in Spain Spanish banks have a reputation for knowing how to sell financial “products”. What Spanish banks are not known to be good at is providing "service”.
Unfortunately, that’s precisely what most American expats seek from a financial institution: good advice.
After all, even if a U.S. citizen who lives abroad never intends to set foot on U.S. soil again, they are still American citizens – and for tax purposes, that means being taxed in the United States. If that individual keeps a large enough balance in a financial account outside the States or has foreign financial assets of sufficient value, they also need to file a Report of Foreign Bank and Financial Accounts (FBAR) and/or a Form 8938.
That individual will also become a tax-resident in Spain if: 1) he or she spends more than half the year (183 days) there or 2) his/her major source of income or economic activity is within the country. If not, they will still be considered a Spanish tax-resident if their spouse or dependent children live in Spain. Those individuals who meet none of these criteria will likely qualify for non-resident taxation.
Added to these complexities are the unique ways that American trusts and retirement savings are viewed by Spanish courts and tax authorities, currency exchange and transfer rules, the complicated rules for passive foreign investment companies (PFICs), and the additional regulations tacked on by European Union’s Markets in Financial Institutions (MiFID).
That’s why a cross-border financial advisor in Spain can be so important. To help you select one who may be right for you, these are important characteristics to look for:
Professional Qualifications--Do some research on the qualifications of your potential advisor(s). Don’t be satisfied until you understand what their qualifications are and what it takes to obtain them. You could begin by contacting the European Financial Planning Association of Spain, EFPA España. They set the standards for financial advisors and financial planners in all of Spain. Their website has a “Find a certified financial advisor” section that shows every registered financial planner and advisor within Spain. Communication Skills--Look for an advisor who talks to you in an easily understood way. This holds true when answering questions (e.g., what is their fee structure?) as well as explaining topics (e.g., their investment strategy). If you find their answers or explanations unclear, it may be intentional on their part . Or maybe they simply don’t have a firm understanding of the topic. Ideally, the advisor teaches classes, has written books, or demonstrates their communication style in some other tangible way before you hire them. Registration--The Comisión Nacional del Mercado de Valores (CNMV) is the regulatory body in Spain that oversees financial advisory firms and protects consumers. To see if an advisory firm is registered with CNMV, you can type their name under “search of authorized entities” on the CNMV website: https://www.cnmv.es/Portal/Consultas/BusquedaPorEntidad.aspx?tipo=ESI. To see if your potential counselor is listed, each advisory firm shows the names and addresses of their agents (agentes). Compensation. Find out how your potential advisor is paid. At private banks in Spain, it’s common for advisors to receive commissions (‘retrocessions') on products sold to clients. In those cases, the advisor is paid when he or she sells you a financial product. A product salesperson may have very different objectives than someone who is compensated for providing advice. Anyone who is trying to do both has an inherent conflict of interest. Language Proficiency and Transparency--Trust is built on getting straight, clear answers to your questions. But clarity in Spain can be difficult when those who understand local tax and regulatory rules are far from the best at explaining them in English. The remedy is selecting an advisor who’s a native English speaker (so you understand them) who has well-informed Spanish colleagues in-house (so they know how things really work). An alternative is finding a native English speaker advisor who has networks of specialists in a variety of jurisdictions to provide them information.